The bulls posted a mild comeback on Thursday, erasing some of Wednesday’s massive losses. Technical analyst Dave Chojnacki of Street One Financial recaps stocks’ chances for a sustained bounce and wraps up the trading week with an update on the key technical levels to watch.
The market quickly moved higher Thursday morning, as equities snapped back from the prior session’s sell-off. Decent economic numbers helped push the averages higher.
As prices rose during the session, traders were back into their favorite big cap techs, driving the Nasdaq 100 to be the best gainer on the day. Equities hit their peak mid-afternoon before selling into the close, but they managed to hold on to close solidly in the green. Volume was heavy for the second straight session.
At the close, the Dow Jones Industrial Average moved up 56 points, the S&P 500 added 8.6 points, and the NDX gained 0.82%. Breadth was just slightly positive, on above average volume. ROC(10)’s advanced, with the DJIA and SPX remaining in negative territory. The NDX finished at zero.
RSI’s moved slightly higher, with the NDX remaining the strongest at 56.1. The DJIA and SPX are in the low 40’s. All three major averages remain with their MACD below signal. The ARMS index ended the day at 1.15, a slightly negative reading.
Equities made a surprising turnaround in yesterday’s session, as most analysts believed that there would be some follow through from Wednesday’s big move lower. The NDX had the best day, moving back over its 20D-SMA of 5619. It is holding critical near term support and is just about 100 points from its recent high of 5724.
The SPX, meanwhile, remains below its 20D-SMA of 2386 and below its 50D-SMA of 2369. It found support at 2352 in the session, just 4 points below a gap close support of 2356. Key near term support is in the 2322 to 2328 area.
The DJIA continues below its 20D and 50D moving averages of 20629 and 20776, respectively.
The VIX finished off 6% to 14.66, remaining elevated from recent levels in the 10 range.
Near term support for the NDX is at 5625, 5619 and 5600. Near term resistance is at 5650 and 5675. Near term support for the SPX is at 2362 and 2350. Near term resistance is at 2369 and 2386.
Europe is higher in early trade Friday, and U.S. Futures are pointing higher in the premarket. Without any major economic reports on tap today, investors and traders will be looking at earnings reports and analyst moves to push stocks around as we wrap up the week.
The SPDR Dow Jones Industrial Average (SI:SPDR) ETF rose $0.48 (+0.23%) in premarket trading Friday. Year-to-date, DIA has gained 4.78%, versus a 5.92% rise in the benchmark S&P 500 index during the same period.
DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #5 of 75 ETFs in the Large Cap Value ETFs category.